Title Insurance and Underwriting Basics

Title Insurance and Underwriting Basics:

Considerations Regarding Title Searches, Legal Descriptions, Surveys and Miscellaneous Liens

J. Price Evans IV

Assistant Vice President, Mississippi Valley Title Services Company Assistant Vice President, Old Republic National Title Insurance Company Commercial Underwriting Counsel

Title Searches

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Underwriting

General Considerations

? Underwriting is a judgment call.

? Underwriting is based on a risk analysis of the transaction.

? Off record risks must be considered.

? We insure unknown risks (fraud, forgery, mis-indexed documents), unlike life or property insurance which insures known risks (hail damage, life expectancy, tornado) which can be calculated actuarially. Known risks must be dealt with, thus the need for "requirements" in a commitment.

? Duty to Defend: Where there is a good chance of litigation, regardless of the merits of the argument or who will win, do not insure. Defense costs, even if the case is successful, often exceed actual loss.

? Our underwriting manual discusses many procedural and underwriting issues in great detail. See for our recently revised and updated underwriting manual.

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Getting Started

How to get title work: Who can you use?

? Independent Abstractors ? Do it yourself ? Another MVT Agent ? Attorney Title Opinions Questions to ask?

? Does your abstractor have Errors and Omissions Insurance? ? What amount of E & O coverage? ? Experience, reputation, references, timeliness, etc.?

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? 2016 OLD REPUBLIC TITLE | All Rights Reserved.

Getting Started

What kind of search do you need?

? Residential:

? Generally 30 year search beginning with a valid warranty deed. Do not merely update from the subdivision plat unless you have base work for the subdivision.

? Commercial:

? Generally 50 year search beginning with a valid warranty deed.

? When your property includes an easement for access:

? The property that is burdened by the easement must be properly searched. ? If the grantor had a mortgage, the lender should partially release the

easement area from the mortgage. Otherwise, a foreclosure of the person who granted the easement would cut off rights to the easement.

? Ask for copies of all documents in chain of title, tax information with tax map, covenants, exceptions, and all other pertinent documents.

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